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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






2. Exists if a producer can produce more of a good than all other producers






3. A good for which higher income decreases demand






4. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






5. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






6. Entry of new firms shifts the cost curves for all firms downward






7. The imbalance between limited productive resources and unlimited human wants






8. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






9. Costs that change with the level of output. If output is zero - so are TVCs.






10. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






11. The marginal utility from consumption of more and more of that item falls over time






12. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






13. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






14. Es = (%dQs) / (%dPrice)






15. The change in quantity demanded resulting from a change in the price of one good relative to other goods






16. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






17. The total quantity - or total output of a good produced at each quantity of labor employed






18. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






19. AVC = TVC/Q






20. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






21. Entry (or exit) of firms does not shift the cost curves of firms in the industry






22. Exists if a producer can produce a good at lower opportunity cost than all other producers






23. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






24. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






25. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






26. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






27. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






28. The sum of consumer surplus and producer surplus






29. The practice of selling essentially the same good to different groups of consumers at different prices






30. Two goods are consumer substitutes if they provide essentially the same utility to consumers






31. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






32. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






33. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






34. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






35. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






36. Ed = 1






37. Models where firms agree to mutually improve their situation






38. The difference between total revenue and total explicit costs






39. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






40. Demand for a resource like labor is derived from the demand for the goods produced by the resource






41. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






42. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






43. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






44. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






45. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






46. Total product divided by labor employed. APL = TPL/L






47. A firm that has market power in the factor market (a wage-setter)






48. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






49. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






50. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry